income statement

Income statement

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Unformatted text preview: rent calendar year. e)  Pays $2,000 on July 15 as a deposit on a custom- made delivery van that the manufacturer will deliver in September. f)  Pays $4,500 on July 25 as an advance on the August salary of an employee. g)  Pays $6,600 on July 25 for adver2sements that appeared in computer journals during June. 19 Let’s take a closer look at the accrual basis Donald and Joanne Allen open a hardware store on Jan. 1, Year 1. •  Jan 1: The firm rents a store building and pays two months’ rent of $4,000 in advance. •  Jan 1: The firm pays the premium of $2,400 for property and liability insurance coverage for the year ending December 31, Year 1. •  Jan 15: Firm acquires merchandise cos2ng $40,000, of which it purchases $26,000 for cash and $14,000 on account for payment in February. •  During Jan: Sales to customers total $50,000, of which $34,000 is for cash and $16,000 is on account for collec2on in February and March. •  During Jan: The cost of the merchandise sold during January was $32,000. •  Jan 20: The firm paid $5,000 in salaries to various employees for work done in January. 20 Accrual Basis: Revenue- Expense=Income Income Statement for the month of January, Year 1: Re...
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This document was uploaded on 03/06/2014 for the course 15 15.502 at MIT.

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